TECHNOLOGY is outrunning the law in the astonishing expansion of the communications industry, and the government is struggling to catch up. The Federal Communications Commission has decided to let the American Telephone and Telegraph Company go into the information business. One reason was that the company is already in it, in the sense that the company is increasingly indistinguishable from data transmission. The real issue is how far this development is to go -- and under whose rules.

The FCC's decision speeds up the choices, but hardly resolves them. The Justice Department has taken, in the past, a position quite different from the FCC's.There is a legal history here that ensures court action. Congress, meanwhile, has been grinding along on a hugely complex bill that covers much of the same ground as the FCC's decision. But that bill won't be passed this year. The questions to be resolved offer a glimpse into the newest, and most rapidly growing, of all American industries.

First question: should AT&T, by far the country's biggest enterprise and a regulated monopoly, be permitted to expand into any kind of competition with other companies? The answer is yes. There's a compelling national interest in developing this information technology, and it's a field in which AT&T has great contributions to make.

Second question: how is AT&T's communications monopoly to be segregated from its competitive businesses? The FCC, like the current version of the bill in Congress, favors a separate subsidiary for AT&T's information business. The danger is that the parent corporation's enormous resources may give the subsidiary crucial competitive advantages over other companies.

Third question: exactly what does "information" mean? It certainly includes data processing. That's where the case started -- with AT&T's anxiety to engage in the linking of computers. It also includes data storage and the operation of central memories that can hold a customer's data or transmit them to other computers at the customer's order. Perhaps it also includes the operation of memories run by AT&T. If the system can provide the time and weather, as it now does, why not the latest stock market quotations? Or the election returns?

As you read this page, you must keep in mind that this newspaper, like every other paper in the country, has the sharpest possible commercial interest in the answers to these questions. A phone company in Texas has proposed, experimentally, to put a video screen into customer's homes enabling them to call up, among other things, grocery store ads.

The challenge for public policy is to enable AT&T to pursue and develop its technology, without letting it swallow up everything in its path. As a competitor in the marketplace, it would possess an overwhelming advantage in its protected ownership of that network of wires reaching into four out of every five American homes. The Justice Department and the courts have worried for years about that advantage, and the FCC's decision will not entirely meet their fears. Sharper rules of competition are going to be necessary, and it will be up to Congress next year to write them.